How much do people out for car loans?

[Deleted User]

Excuse my mistake in the subject - can't change it now! DOH!

I'm about to become debt free (apart form mortgage) in the next two months, I took out a loan a year ago to get rid of some silly credit card debt. I'm currently paying out a £400 loan repayment per month, last payment in May.

Basically I want to get a new car (not brand new in particular) and I like fast things - so probably a bit expensive. The £400 seems to be a bit of a bind to be honest and don't really want to be paying quite this much out for the next 3 years on a car loan.

I recon that after all my bills are paid out in a month I'm left with about £1,000 spending money. But not sure how much of this I want to part with for a car loan. I was thinking somewhere in the region of £250 - £350 per month (so about 25-35% of my spending money after bills, mortgage, food, petrol, etc), borrowing over no more than 3 years.

Does this seem high? What does everyone else pay out for their car loans/HP/lease as a percentage of your spare cash after bills? Or should I just stick with the crappy old car for a little while longer?

Pee

I must say that I am a fan of the crap old cars and that must be the most money saving way to do it. Buying a second hand car at the moment is quite hard, I don't think many people are selling.

It might be worth comparing the figures for leasing a new car - esp if in three years you'd be left with a car that you no longer wanted to be seen in.

[Deleted User]

Thanks, you're probably right. Secondhand cars are in high demand at the moment and prices seem to be pretty high. It's not that I wouldn't want to be seen in it after three years, but just don't want to end up owing out more money than the car's worth. With regards leasing, I don't like the idea of being locked in to a deal for however many years with restrictions on mileage and then having nothing to show for it after the lease has ended. At least with a loan you can always sell the car and pay the loan off with the proceeds (hopefully).

Was just wondering what sort of money people spend on car loans per month as a guide.

nikki2804

I pay £165 p/m for my car loan - over 5 years. Its up in September 2011 which I'm glad off. Personally if you have that amount spare per month then I would save up for a few months. You may get a better deal and then your not tied into a 3/4/5 year loan.

calebdylan

I suggest you better stick with your old car for a longer time as £250 - £350 per month seems to high. As far as I'm concerned, that's too heavy for my pocket. Hope that's the same scenario on your side.

CHR15

I'm glad you are limiting the repayments to 3yrs. I've always considered 3yrs to be the maximum to repay a car for.
I get fed up with mine after 2yrs and pretty much look forward to changing it after 3, I would hate to be lumbered with repayments for longer and being stuck with it.

I would think with £1k disposable each month, I would look at £250 maximum. You need to be able to save for the extras (holidays, gifts and all the unknowns which pop up)

JasX

why not keep your existing car another 18 months and SAVE up for a new one? with £1,000 disposable each month if you really try (well you won;t need to try that hard tbh) you'd be able to put away just as much as a £250 per month 3yr high interest loan would get you

By being patient a good deal might come along saving you even more.... then you'd avoid paying interest alltogether, have the car you wanted (or better) and have the following few years free of car loan payments?

[Deleted User]

Some good advice here guys. Keep it coming. I do like the idea of saving up, but then I'm absolutely rubbish at saving. I suppose it's never too late to learn. I'd have to keep my savings quiet from the wife though because she'd have different ideas for it!

saltnvinegar

Having just got rid of a car loan last year that was costing me £312 a month over the last 3 years my advice would definately be don't do it!!

I sold the car the loan was on and bought a cheap Saab that cost me £600. I've done 15,000 miles in it and all its cost me is petrol, a service and Tax. Thats saved me over £2000 in car repayments since then!!

If you can afford to put aside £400 a month then you will have a decent sum of money in 12-18 months. If you're rubbish at saving look at setting up a high interest account that you can't take your money out of easily (i.e. you have to give a period of notice to get at your money) and pay into this by DD every month.

This does have the disadvantage that you can't access this money in an emergency but if you're saving for a long term goal......

I've taken out 3 loans on cars over the years and have regretted it each time, its a right pain of a burden and once you've paid it off the car (unless you've gone new or nearly new) is a wreck and you have the whole cycle again.

Whichever route you choose enjoy your car!!